SpiceJet orders 100 Boeing planes valued at $11 billion

New Delhi: Budget carrier SpiceJet Ltd on Friday said it had placed an order to purchase 100 Boeing 737 Max aircraft, valued at $11 billion, from Boeing Co., in a deal that would help the airline expand operations and result in fuel-cost savings.

“This order is a great step for creating a strong foundation for SpiceJet,” airline chairman Ajay Singh said on Friday.

Besides the 100 aircraft, SpiceJet has an option to buy 50 more 737 Max planes that it can convert into a firm order later.

Taken with a previous order for 55 aircraft, SpiceJet’s total order could rise to 205 planes. Of these, 155 will be delivered to the airline between 2018 and 2024.

More aeroplanes would be leased this year to expand SpiceJet’s presence in the country, Singh said, adding that the November-December quarter had been profitable for the airline in spite of the demonetization shock.

The airline expects the fuel-efficient Max aircraft to help it save about 20% in fuel costs.

SpiceJet has included a clause in the deal that allows it to convert the Max order into wide-bodied planes that can fly to Europe and beyond in future.

SpiceJet is also opening a pilot training facility in Delhi on which work has already started, Singh said.

“The deal was signed on New Year’s eve,” said Dinesh Keskar, senior vice-president (sales), Asia-Pacific and India, Boeing Commercial Airplanes. “We couldn’t have asked for more to end the year.”

Singh took over SpiceJet in December 2014, when the airline was facing the possibility of a shutdown due to a massive cash crunch.

The airline, Singh said, has made a profit of Rs1 crore on average in the last 680 days, compared with a loss of Rs3 crore a day during the 365 days before that.

Helped by a supportive government which did not want to see another airline grounded after Kingfisher Airlines Ltd and a record crash in fuel prices–which account for over 40% of the costs of an airline–Singh managed to steer SpiceJet from a market share of around 7% to 13% currently.

To be sure, almost all airlines, including Air India Ltd, posted profits during 2015-16.

SpiceJet shares rose 2.5% on the BSE on Friday to end at Rs65.50 apiece on a day when the benchmark 30-share Sensex dropped 0.03% to end at 27,238.06 points.

Shares of rival Jet Airways dropped 0.12% to end at Rs390.65, while those of IndiGo fell 0.16% to end at Rs874.90 apiece.